AGO Reports MVR 354.7 Million Loss in Housing Project, Calls on ACC to Investigate Polco

Auditor General’s Office (AGO) suspects fraud over the housing project managed by the Police Cooperative Society (Polco) and recommends immediate recovery of payments issued to Island Experts and urged the Polco’s board of directors at the time be submitted for Anti-Corruption Commission for investigation.

In the Special Audit Report of Housing Project (Blues Housing Project) published by the AGO on Thursday, they disclosed that the Maldives government incurred a financial loss of MVR 354.7 million due to inefficiencies and alleged corruption within the Police Cooperative Society (Polco). 

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The AGO also called on relevant authorities to hold the Polco leadership accountable at the time. The report called for the Ministry of Finance to take action against contractors who breached their contractual obligations as well.

Special Audit Report of Police Housing Project (Blues Housing Project) https://t.co/5Xj2aRh2Xp pic.twitter.com/a08df6YKyv— AGO (@AuditMV) January 24, 2025

The loss pertains to a housing project initiated in 2013 to construct units for Maldives Police Service officers, which was managed by Polco. The project, with a total expenditure of MVR 1.06 billion as of the audit date, amounted to a cost of MVR 1,851 per square foot. 

This far exceeded the market rate for similar constructions, which ranges between MVR 1,300 and MVR 1,500 per square foot, according to data from the Ministry of Finance’s Tender Evaluation Board. Based on these benchmarks, the project could have cost between MVR 745.3 million and MVR 859.9 million, revealing an excess expenditure of between MVR 240.1 million and MVR 354.7 million.

The audit highlighted Polco’s lack of technical expertise, amendments to contracts favouring contractors, and other elements indicative of potential fraudulent and corrupt practices. Agreements with contractors were found to disproportionately benefit their representatives, raising further concerns about financial mismanagement.

The following expenditures were recorded for the housing project: plot cost to Housing Development Corporation (HDC), MVR 15.5 million; fines to HDC, MVR 151,282; payments to Noomadi, MVR 76.1 million; payments to Island Experts, MVR 432 million; payments to Island Experts’ sub-contractors, MVR 199.4 million; payments to Dhe Koamas, MVR 4.2 million; payments to Dhe Koamas’ sub-contractors, MVR 10 million; payments to HAO, MVR 10.3 million; and payments from the Ministry of Housing to Amin Construction, MVR 310.5 million. The total expenditure, including an unpaid balance of MVR 18 million, amounts to MVR 1.06 billion.

The audit revealed that agreements with Noomadi favoured its representative, who also served as the Managing Director of Island Experts. This individual, a relative of the Managing Director of Dhe Koamas, received a combined total of MVR 682 million in direct and indirect payments.

To prevent similar issues, the report suggested assigning such projects to relevant government authorities instead of cooperative societies. It also recommended clearly announcing any duty exemptions for construction materials in government-led projects to ensure transparency and cost efficiency.